Commodities viewed as a safer bet

Growing demand is changing the opinion of fund managers, writes Frank Botchwey
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FUND managers are always seeking the best medium through which investors can expect an above average return with minimal risks. One area that has recently attracted their interest has been commodities, such as oil and industrial and precious metals, traditionally viewed as a high- risk area for investments.

Ignored for most of the 1980s and through the recession, commodities over the past year have been seen by fund managers as an area of long- term growth. While demand for raw materials has tapered off in the developed world, it is rising in newly industrialised countries. The price cycle of commodities also differs significantly from the stock market's, offering useful diversification for large portfolios.

The Hambros Commodities Fund, based in Dublin, is an investment trust built on a mix of commodities and equities. Assets are split evenly between commodities-based stocks and commodity futures. Shares will be bought in blue-chip companies around the world whose profits depend on commodity prices.

GNI, the futures broker, plans to use its expertise in derivatives to make direct investments in commodities through futures contracts, to take advantage of differences between cash prices and futures prices.

There is a tendency for futures prices on commodities to trade at a discount to the current price. Profits can be made if the price of the commodity remains above the futures price when the contract expires.

This fund's mix of commodities will shadow the Goldman Sachs Commodity Index, a benchmark index of 25 commodities. Over the past year it has risen by 4 per cent, but the industrial metals component of the index has shown increases of more than 30 per cent over the same period.

The Hambros fund will re-weight the constituents to take advantage of favourable movements in specific commodities. Priced at $1 per share, it is an open-ended fund - allowing investments to be cashed in at any time. There is an initial charge of 5 per cent, an annual management charge of 1.75 per cent over 12 months, and minimum investment of £1,000 or $1,500.

The £100m BZW Commodities Investment Fund was launched on 27 October. Ron Gould, the managing director of BZW Investment Managers, said: "The whole approach has been to buy commodity futures as opposed to shares." He said rising industrial production in many countries around the world had produced higher demand for raw materials and had presented an opportunity arising from the resulting higher prices.

Fleming's Natural Resources Fund was also launched in October, against the backdrop of rising metal and oil prices. It is a closed-end fund with a five-year life. Investors will be given the choice of winding up the trust and sharing any profits after two and a half years, and again before it is wound up after five. Assets are split between energy, metals, and forestry products. Almost a third of the portfolio will be in base and precious metals, a similar amount in oil and gas companies, and a lesser amount in other raw materials.

INSTANT ACCESS Telephone Account Notice Deposit Rate Interest

or term % interval

Yorkshire BS 0800 378836 1st Class Access Postal £1,000 6.20 Year

Skipton BS 01756 700511 3 High Street Instant £2,000 6.25 Year

Northern Rock BS 0500 505000 Go Direct Postal £20,000 6.70 Year

Nottingham BS 0115 948 1444 Post Mark Postal* £25,000 7.25 Year

NOTICE ACCOUNTS

Bradford & Bingley BS 0345 248248 Direct Notice 30 Day (P) £10,000 6.90 Year

Coventry BS 0345 665522 Postal 50 50 Day (P) £2,000 6.55 Year

Scarborough BS 01723 368155 Scarborough 50 50 Day (P) £25,000 7.35 Year

Northern Rock BS 0500 505000 Postal 60 60 Day (P) £50,000 7.25 Year

TERM ACCOUNTS

Portman BS 01202 292444 Fixed Interest Bond 1 Year £500 7.00 fixed Year

Halifax BS 0422 333333 Guaranteed Reserve 1 Year £10,000 7.20 fixed Year

Birmingham Midshires BS 0500 710710 Quantum Fixed 2 Year £5,000 8.15 fixed Year

Woolwich BS 0800 400900 3 yr fixed rate bond 3 Year £500 8.50 fixed Year

MONTHLY INTEREST

Birmingham Midshires BS 01902 710710 First Class Postal £1,000 4.79 Month

Britannia BS 01538 392808 Capital Trust Postal £2,000 5.84 Month

£10,000 6.31 Month

£25,000 6.55 Month

TESSAS (tax-exempt special savings accounts)

Sun Banking Corp 01438 744500 5 Year £8,900 9.00 fixed Year

Market Harborough BS 01858 463244 5 Year £9,000 7.75 Year

Hinckley & Rugby BS 0800 774499 5 Year £3,000 7.65 Year

Barclays Bank 0800 400100 5 Year £1,000 7.50 Year

HIGH-INTEREST CHEQUE ACCOUNTS

Woolwich BS 0800 400900 Current Instant £500 3.85 Year

Halifax BS 01422 333333 Asset Reserve Instant £5,000 5.00 3 Months

Chelsea BS 0800 717515 Classic Postal Instant £2,500 6.00 Year

£25,000 6.50 Year

OFFSHORE (gross)

Portman Channel Islands 01481 822747 Instant Gold Instant £5,000 6.20 Year

Derbyshire IOM 01624 663432 Instant Access Instant £25,000 6.65 Year

Bradford & Bingley IOM 01624 661868 Island Ninety 90 Day £25,000 7.05 Year

Halifax JSY 01534 59840 Fixed Rate Intl 1 Year £50,000 8.00 fixed Year

NATIONAL SAVINGS

Accounts & bonds (gross) Notice or term Deposit Rate % Interest interval

INVESTMENT ACCOUNTS 1 Month £20 5.25 Year

£500 5.75 Year

£25,000 6.00 Year

INCOME BONDS 3 Month £2,000 6.50 Month

£25,000 6.75 Month

CAPITAL BONDS (Series I) 5 Year £100 7.75 fixed Maturity

FIRST OPTION BONDS 12 Month £1,000 6.40 fixed Year

£20,000 6.80 fixed Year

PENSIONER'S GUARANTEED INCOME BOND (Series 2)

5 Year £500 7.50% fixed Month

NS Certificates (tax free)

42nd ISSUE 5 Year £100 5.85 fixed Maturity

8th INDEX-LINKED 5 Year £100 3.00+RPI Maturity

CHILDRENS BOND (Issue G) 5 Year £25 7.85 fixed Maturity

P= by post only. *=7 day notice. =fixed for first 18 months. All rates are shown gross and are subject to change without notice.

Source: Chase de Vere Investments PLC - 0171 404 5766. Compiled on 30 March 1995

MORTGAGES

Fixed rates Telephone Rate/period Max Fee Incentive

% advance % £

Yorkshire BS 01274 740740 1.90 to 1/4/96 95 £250 -

Northern Rock BS 0800 591500 5.49 to15/4/97 95 £250 Free valuation

Cheshire BS 0800 243278 7.49 to1/1/98 95 £250 -

Ipswich BS 01473 211021 8.25 to 1/1/99 95 - Free valuation - EBs

Northern Rock BS 0800 591500 8.54 to 15/4/00 95 £250 Free valuation

TSB Local branch 9.49 to 31/3/05 95 £250 Free valuation

Variable rates

Coventry BS 0800 126125 2.00 to 1/6/96 95 - £300 Cashback

Northern Rock BS 0800 591500 2.49 to 1/7/96 90 - Free valuation

Principality BS 0117 929 7804 5.25 to 1/6/97 90 - Free valuation

Greenwich BS 0181 858 8212 6.25 for 3 years 95 - £350 Cashback - FTB

PERSONAL LOANS

Unsecured Telephone APR Fixed monthly payments on £3,000 for 3 years

% With insurance Without insurance

Midland Bank Local branch 15.40 £116.54 £103.14

National & Provincial BS 0800 808080 15.50 £118.22 £103.29

Clydesdale Bank 0141 248 7070 16.20 £113.94 £103.33

Secured Max advance % Max term

Royal Bank of Scotland 0800 161616 10.90 70 3 years to retirement

Midland Bank Local branch 11.40 80 5 to 30 years

First Direct 0800 222000 11.20 80 Up to 40 years

TYPICAL OVERDRAFTS

Telephone Authorised Unauthorised

EAR % EAR %

Barclays Bank Local Branch 19.20 29.80

Lloyds Bank Local Branch 19.40 26.80

National Westminster Bank Local Branch 18. 90 33.25

BEST OVERDRAFTS

Telephone Authorised Unauthorised

EAR % EAR %

Woolwich BS 0800 400900 9.50 29.50

Alliance & Leicester BS 0500 959595 9.50 29.80

Abbey National 0800 555100 9.90 29.50

CREDIT CARDS

Telephone Card name Minimum Rate APR Annual

income pm % % fee

Standard

Robert Fleming (S&P) 0800 282101 Mastercard/Visa - 1.00 14.60 £12

Royal Bank of Scotland 0800 161616 Mastercard - 1.14 14.50 -

TSB Local branch Mastercard/Visa - 1.38 17.90 -

Gold cards

Lloyds Bank Local branch Mastercard £20,000 1.15 16.50 £40

Midland Bank Local branch Visa £20,000 1.30 18.10 £35

MBNA International 0800 062620 Mastercard/Visa £20,000 1.45 18.90 -

STORE CARDS

Payment by direct debit Other methods

Telephone pm APR pm APR

John Lewis Local store - - 1.39 18.00

Marks and Spencer 01244 681681 1.90 22.40 1.84 24.40

Burtons Local store 1.97 26.30 2.21 29.90

EB=Existing Borrower APR=Annualised percentage rate. EAR=effective annual rate.

All rates are subject to change without notice.Source: London & Country. Freephone 0800 373300 Compiled on 30 March 1995

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